Icelandic Bankers Are Not Too Big To Jail: Face 74 Years In Prison As US Bankers Bask In Bailouts

As TheAntiMedia's Claire Bernish exclaims, you could ice skate in Hell sooner than see the United States follow in Iceland’s footsteps with this move: the 26th banker was just sentenced to prison for a combined 74 years between them — each of them jailed for their roles in the 2008 economic collapse.

Five top bankers from Iceland’s two largest banks — Landsbankinn and Kaupþing — were found guilty of embezzlement, market manipulation, and breach of fiduciary duties. Though the country’s maximum penalty for financial crimes currently stands at six years, the Supreme Court is currently hearing arguments to extend the limit. Most of those convicted have so far been sentenced to between two and five years.

Do those sentences sound light to you? Perhaps. Until you consider the curious method of punishment the U.S. employed for its thieving bankers.

While Iceland allowed its government to take total financial control when the 2008 crisis took hold, American bankers — in likely the only bail handout given to criminals of mass destruction — received $700 billion in Troubled Asset Relief Program (TARP) funds.

Thank you, Congress American taxpayer.

Iceland certainly didn’t make it through the crisis unscathed. It repaid the IMF (the final $332 million owed was paid in full, ahead of schedule, earlier this month) and other lenders for funds needed to prevent a complete financial meltdown nearly eight years ago. Icelandic bankers are still being held to task for their illegal market legerdemain that nearly brought down the financial planet.

In contrast, not one banker in America has ever (nor will ever?) be held responsible for their criminal acts. Instead, essentially in addition to the $700 billion windfall — Big Banks are now raking in over $160 billion in profit every year.

Iceland’s president, Olafur Ragnar Grimmson, described how his country not only weathered the storm, but has been labeled the first European country to fully recover from the crisis:

“We were wise enough not to follow the traditional prevailing orthodoxies of the Western financial world in the last 30 years. We introduced currency controls, we let the banks fail, we provided support for the poor, and we didn’t introduce austerity measures like you’re seeing in Europe.”

Iceland, a small Nordic island country, better known for glaciers than economic policy, has followed a very different path and their economic cancer of debt-deflation is in remission.

Today the Icelandic economy is rapidly expanding with low unemployment, high growth, and declining debt even when Europe is printing money to avoid falling back into deflation. It is hard to believe that just 7 years ago Iceland faced arguably the direst conditions in the region. The banking system held assets at 10x the size of GDP after a decade of de-regulation in the lead up to the crash.

In the aftermath of the bubble, GDP collapsed -7.6%, unemployment exploded above 8%, and inflation surged to above 12%. Banking liabilities, mainly denominated in foreign currencies, ballooned to 20x the budget of the State. Iceland accepted over $5bn in bailouts from the IMF and neighboring countries following a run on the banking system. What happened next goes against all contemporary economic thinking.

Iceland did not re-leverage their financial system, bail out their banks, print money, or use public assets to support the stock market.

Iceland refused to promote private risk with public money...

They did the exact opposite and let the private banks crash and prosecuted officials for negligence.

Iceland then treated the disease and not the symptoms by undergoing a rigorous period of economic chemotherapy.

Iceland devalued the Krona, introduced capital controls to stabilize local outflows and foreign inflow of assets, wrote down household debt, raised interest rates to 18%, and introduced more austerity than any European country other than Greece. The stock market fell 95% and interest payments on loans soared to over 300%.

Like medical chemotherapy, economic chemotherapy was horrible, but the cancer of debt-deflation was eradicated and the system made whole.

Today Iceland’s economy has become one of the top performers in Europe with GDP growing +5.6% in the second quarter and unemployment falling to 4% versus 11% in the Eurozone. Tourism has grown +100% since 2006 and exports are up. Iceland began repaying IMF loans earlier than expected in 2012, and by the end of 2015, they will be eliminated. Icelandic debt-to-GDP is falling even as the rest of the developed world has seen debt levels balloon out of control. There are still challenges. Iceland is set to remove capital controls and businesses and residents lament that it is difficult to get loans at reasonable interest rates. The road forward will not be easy but Iceland has hope where there is little of it left in deflation ravaged Greece and Spain, where over one fifth of the citizens and over half of those under 25 years old are unemployed. Iceland’s cancer is in full remission and Europe’s is getting worse.

Risk cannot be destroyed, it can only be shifted through time and redistributed in form. Iceland has taken its risk head on, while the rest of the world has shifted its pain forward for our children to deal with. Every economy is different. Iceland is a small country with a largely homogenous population of only 300k. It may be difficult to fully adopt their methods in large countries that are less politically or culturally unified. While the Iceland model may not be the solution for every economy, the fact it is not part of the policy debate represents a clear failure of our leadership.

The prosecution of the Icelandic banksters represents an accountability that does not exist in the United States of America.

It seems clear that the financial “Masters of the Universe” are the ones that truly control the political apparatus in the U.S., making it obvious there is no one who is going to hold them accountable for manipulating and crashing the financial markets.

The $700 Billion TARP was just a downpayment to fund Bankster bonuses for that year. Amongst others, The Fed then purcahsed $1.5 TRILLION of MBS from its shareholder Banks at full face value when, in reality, their true "Mark to market" value was at best 5 cents on the dollar. These will eventually have to be written off because at least half of them are totally fraudulent and the balance worthless. It then pumped in QE cash, using money printed from thin air, and changed policy so as to pay interest on excess reservves. Total joke but, hey, dancin with stars is on and they still have cheesy twirls in WalMart.

Not only will there will be no legislation agains US Banksters, the US Banksters will get back at Iceland. Just watch at how Iceland is treated when they need loans. South American and African Warlords will have easier access to money than Iceland.

There were also loans from the Nordic nations, from Poland and the Faroe islands. All of those are also fully paid up.

The first loan we got was from the Faroe islands, at that time Iceland was totally frozen out of all markets and no one dared to lend a dime to Iceland.

Iceland was on the top 10 most evil terrorist nation list in Britain and terrorist laws were used against Iceland to force Iceland to accept the Icesave deal (basically a deed for the country) and then surrender to the IMF and allow them to determine our future.

This Icesave adventure in question was related to Landsbanki bank and its activities in the UK, who had nothing whatsoever to do with the Icelandic state. Iceland took this matter to the courts and won.

Coinage Act of 1849 set the death penalty for anyone who debases the nation's coinage; a law which, if enforced today, would wipe out the House of Representatives, the Senate, the managerial level of the Treasury Department, and the Presidency.

A FOI Act request was filed by a now deceaased reporter trying to determine the scope of the US FED bailout. In compliance with that request which the FED adamantly opposed and tried to block- it was discovered that the FED bailed out worldwide banks to the tune of 15 trillion. Like they had a dusty 15 trillion laying in the basement waiting to be deployed on a rainy day. Such chicanery.

I tell you this from memory. I had the details bookmarked on my site "Frankenstein Government" I am gonna go search the site and see if I can find it again. It may have been on ZH as well.

What legislation are you talking about? I don't see any serious threats to the banks grip on us. Many understand what should be done, but who with any authority wiil or can act? Most in leadership positions are part of the problem and will never be part of the solution.

The big banks need to be broken up. Glass-Steagall needs to be brought back in a more rigid form, creating an absolute firewall between basic banking and all forms of other invetsment banking, real estate ownership, insurance companies, etc. All of these things are functions for private businesses to be totally managed with private capital and private risk. No mega corporation should have taxpayers on the hook for any type of bailout.

Basic banking is actually a pretty simple business, and works very well when kept smaller and localized. In fact, if we wanted a National Bank to handle essential checking and savings operations, we could turn it over to the Post Office, and pump badly needed revenue into an essential public service that is currently struggling under competition from the private sector, and made worse by Congressional mandates that prevent them from becoming more competitive while draining cash flow with heavy handed requirements to fund retiement programs.

There are many things we could do, but bribery & collusion are keeping us from doing them.

Between the shills for one side or the other, and the emotionally stunted misogynists who take turns coming up with evermore obscene descriptions of females, it is harder to find the informed arguments from both sides of an issue. There seems to be a rising number of emotion driven commenters who only contribute derogatory remarks in a pile on fashion, which extends the threads and makes intelligent conversation virtually impossible.

I really do love the site. The steady flow of compelling news is like trying to drink from a fire hose, but the comments section too often devolves into something too tedious to bother with.

On the other hand, there seem to be quite a few here who know what I am talking about and agree with me. Having to wade through filth from grown, so-called men who sound like potty mouthed brats is not at all interesting to those whose mental development reaches beyond adolescence.

Of course, I do realize who I'm addressing, so trip on, and have a few laughs on me. Love the image your moniker conjures up.